Market Corner: Eye on Technicals For Blackmores Ltd (BKL.AX)

July 5, 2017July 5, 2017Mary Jones

Many technical traders will be taking a look at different indicators to help figure out where shares may be heading. At the time of writing, Blackmores Ltd (BKL.AX) has a 14-day Commodity Channel Index (CCI) of 119.60. Although the indicator uses the term commodity, CCI can be translated to use on other investment tools such as stocks. The CCI was developed to typically stay within the -100 to +100 levels. Traders may employ the indicator to determine stock trends or to identify if a stock is trading in overbought/oversold territory. A CCI reading above +100 would imply that the stock is overbought and possibly set for a correction. On the other side, a reading of -100 would imply that the stock is oversold and possibly set for a rally.

A popular tool among technical stock analysts is the moving average. Moving averages are considered to be lagging indicators that simply take the average price of a stock over a certain period of time. They may also be used to assist the trader figure out proper support and resistance levels for the stock. Currently, Blackmores Ltd (BKL.AX) has a 200-day MA of 108.64, and a 50-day of 100.31. Presently, the stock has a 14-day RSI of 53.97, the 7-day is sitting at 62.40, and the 3-day is resting at 63.68. The Relative Strength Index (RSI) is one of multiple popular technical indicators created by J. Welles Wilder. Wilder introduced RSI in his book “New Concepts in Technical Trading Systems” which was published in 1978. RSI measures the magnitude and velocity of directional price movements. The data is represented graphically by fluctuating between a value of 0 and 100. The indicator is computed by using the average losses and gains of a stock over a certain time period. RSI can be used to help spot overbought or oversold conditions. An RSI reading over 70 would be considered overbought, and a reading under 30 would indicate oversold conditions. A level of 50 would indicate neutral market momentum.

Blackmores Ltd (BKL.AX)’s Williams Percent Range or 14 day Williams %R presently is at -29.08. In general, if the reading goes above -20, the stock may be considered to be overbought. Alternately, if the indicator goes under -80, this may show the stock as being oversold. We can also take a look at the Average Directional Index or ADX of the stock. For traders looking to capitalize on trends, the ADX may be an essential technical tool. The ADX is used to measure trend strength. ADX calculations are made based on the moving average price range expansion over a specified amount of time. ADX is charted as a line with values ranging from 0 to 100. The indicator is non-directional meaning that it gauges trend strength whether the stock price is trending higher or lower. The 14-day ADX presently sits at 28.26. In general, and ADX value from 0-25 would represent an absent or weak trend. A value of 25-50 would indicate a strong trend. A value of 50-75 would indicate a very strong trend, and a value of 75-100 would signify an extremely strong trend.

Market watchers diligently track the companies they think can do well to grow earnings. The goal is typically to discover stocks that are most likely to outperform in the future. Many investors like to keep tabs on sell-side analyst views. Following the direction estimates are trending may provide a deeper glimpse into the health of a company. Investors may need to follow a disciplined system which may help keep emotions in check when making investment decisions. On the other end, it may be necessary to craft a new strategy if the old system isn’t providing the types of expected returns. It can also become very time-consuming to keep up with shorter-term trends and events. Managing the short-term plan with the long-term plan can be difficult given the existing economic climate.